EUROPEAN UNION: European Commission Amendments to the Solvency II Delegated Regulation

Thursday October 1 2015

On 30 September 2015, as part of a package of measures forming part of the Capital Markets Union initiative to remove barriers to investment in the EU, the Commission made a number of amendments to the Solvency II Delegated Regulation.

The main element concerns infrastructure. ’Qualifying infrastructure investments’ will now form a distinct asset category under Solvency II and will benefit from an appropriate risk calibration, lower than that which would otherwise apply (for example the calibration of the stress factor for such an investment in unlisted equity is lowered from 49% to 30%). This will ultimately lead to a lower capital charge.

Investments in European Long-Term Investment Funds (ELTIFs) will benefit from the same capital charges as equities traded on regulated markets, lower than that for other equities, bringing them in line with investments in European Venture Capital Funds and European Social Entrepreneurship Funds. Equities traded on multilateral trading facilities (MTFs) will also benefit from the same capital charge as equities traded on regulated markets.

A transitional measure for equity investments will be extended to unlisted equities, so that insurers will not suddenly withdraw from equity investments. There is also clarification on how insurers should apply the transitional measure to equities held in managed funds.

Click on the link above for further details.